Short term risks and uncertainty factors
Biohit’s key risks are related to the investments required for business growth and adequacy of economic resources these require in the medium term. Company’s management assessment is that company’s ability to continue its operations is good and there are no indications towards events or circumstances that alone or together might give a significant reason to doubt the organisation’s ability to continue its operations in the next 12-month-period.
Other risks are involved in areas such as the success of clinical trials, the selection and development of new market areas and distribution channels, personnel recruitment, registration processes, product pricing, and political decision-making affecting the progress of screening programs. Significant short-term risks are associated with the successful selection of new market areas, the timing of expansion into selected markets and product success in these markets. The recent increase in uncertainty factors associated with international politics may have an unfavourable impact on the company’s business.
The duration of the product registration process is different in each market area. For this reason, it is not possible to accurately assess the time taken for the authorities to handle registrations in these areas and for product sales to begin.
When investing liquid assets, the objective is to gain a return on investment with a minimum risk of equity loss. The investment portfolio consists of deposits, money market investments and corporate loans. A fundamental aspect in portfolio management is sufficient diversification across different asset classes, investment instruments and counterparties. Biohit conducts its investment activities with at least two partners.
Biohit’s operation’s customer base is widely diversified, with the exception of GastroPanel® sales in China, which currently represents a major single business for Biohit. Due to this reason, the company is dependent on the continuation of this business relationship. Otherwise, the company is not significantly dependent on individual customers or project deliveries. Most of the company’s business is conducted in euro, and the indirect effects of currency exchange rate fluctuations are considered insignificant.
Outlook for 2017
Together with its distributors and license partners Biohit has several product registrations ongoing in a number of different markets, which is affecting net sales development. A number of such registrations are expected to be completed in 2017. In addition, negotiations are in progress with new partners, including on the launch of major screening projects, but a number of political risks are affecting the progress of such projects.
Biohit’s cost structure is characterised by high investment in research to obtain further evidence on the efficacy of Biohit’s diagnostic tests in various clinical settings and in population-based screenings. In 2016, Biohit Oyj started the confirmatory study on smoking intervention, together with research agency Kuulas Helsinki, which was completed in 2017 with excellent results. Biohit believes that this product has a high demand on the market due to the product’s proven efficacy, innovativeness, differentiation from the competitors and because it has no side-effects. Biohit will launch the new smoking cessation product on the domestic markets in 2018, followed by other launches together with the selected partners. The product will also be licenced with selected partners globally and these negotiations are ongoing.
In late 2016, Biohit announced the launch of the GastroPanel® quick test. GastroPanel® quick test differs from the current version by being able to give the result already during a single clinical appointment. GastroPanel® quick test will be available in Europe after the performance and clinical tests required by the CE certification process are completed.
We aim to grow profitable and are strongly committed to taking necessary actions in order to build a profitable future for the company. Net sales growth is expected in 2017. The company does not assess when the result adjusted for items affecting comparability will turn positive.